We simply attempt to be fearful when others are greedy.
Source: Berkshire Hathaway Letters · Investing · Psychology
Core Idea
The core idea is to be cautious and conservative when markets are euphoric, and bold and opportunistic when others are scared and fleeing investments.
Practical Application
Apply Buffetts quote by calmly saving cash during euphoric booms and then patiently buying strong, undervalued assets when fear drives prices well below their long-term business value.
Why It Matters
Buffetts quote highlights the contrarian insight that real investing edge comes from resisting crowd psychology, using discipline and patience to profit from extreme fear and irrational exuberance.